SEC logs record caseload

The agency opens more than 1,450 enforcement actions in the two years since undergoing a reorganization.

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By Joshua Gallu

capecodtimes.com

By Joshua Gallu

Posted Feb. 23, 2013 at 2:00 AM

By Joshua Gallu
Posted Feb. 23, 2013 at 2:00 AM

» Social News

WASHINGTON — The Securities and Exchange Commission has been trying for four years to convince investors and critics that it's back on the beat.

As part of that effort, the agency has cited a record number of enforcement actions over the past two years — 734 in fiscal 2012 and 735 the year before — as evidence that an overhaul of its investigative forces has made the regulator smarter, faster and more effective.

"The sustained high-level performance comes two years after the division underwent its most significant reorganization since it was established in the early 1970s," the SEC said in a November statement when it released the tally. "The results in 2012 were aided by many of the reforms and innovations put in place in the past two years."

However, an analysis of that data by Bloomberg shows that the SEC filed fewer new actions last year compared with 2009, the year before it reorganized. The agency didn't surpass those levels in 2011, either.

About 228, or 31 percent, of the 734 enforcement actions were so-called administrative proceedings that institute penalties in cases that were already brought, sometimes years earlier. Examples of administrative actions include barring people who've already been found guilty of fraud from working in the industry, or temporarily suspending accountants from practicing before the SEC.

Excluding such follow-on proceedings, the SEC filed 506 original actions last year, fewer than the 520 it filed in 2009, the year before the reorganization. In 2009, 144, or 22 percent, of the 664 total actions were follow-on proceedings.

"The SEC is the only federal agency that can kick bad actors out of the securities industry," SEC spokesman John Nester said in an email. "These proceedings are fiercely contested, but it's hard to see how investors would benefit if we won a fine in court but let the person go on cheating customers."

When the SEC announced the results in November, then- Chairman Mary Schapiro cited the "innovative reforms" for the results.

The agency did order $3.1 billion in financial penalties and disgorgement of illegal profits last year compared with $2.4 billion in fiscal 2009. Investigators in specialized units set up under Schapiro also have brought novel electronic trading cases.